Kitzhaber's Budget Will Include Pension Cost-Cutting

Oregon Governor John Kitzhaber is asking lawmakers in Salem to take a hard look at cutting costs in the state's pension system. Some of those potential savings will be a part of the two-year spending plan that the Democrat will unveil this Friday.

Oregon's Public Employees Retirement System, or PERS, is a perennial hot potato at the capitol. Public employees take their pensions very seriously. PERS director Paul Cleary understands that. He says it's a long-term relationship. Very long-term.

Cleary: "We've got them from date of hiring to date of retiring to actually date of expiring."

But the cost of maintaining the promises made to public workers is on the rise. State agencies, local governments and school districts now have to pick up the slack left by a sluggish stock market. For the Salem-Keizer School District, it means pension costs are set to jump eight percent in the upcoming budget cycle, says Business Manager Mike Wolfe.

Wolfe: "Increasing your costs one or two percentage points, you could probably figure that out. But when you're jumping seven, eight percent…that's a huge leap."

Governor Kitzhaber is floating a series of cost-cutting ideas, including a scale-back in annual cost of living increases for wealthier retirees. But the proposals face resistance from public employee unions, who question the legality of some of the potential changes.